Coca-Cola Europacific Partners PLC (CCEP): PESTLE Analysis [Nov-2025 Updated]

You're holding a stake in Coca-Cola Europacific Partners PLC (CCEP), a powerhouse we project will deliver roughly $21.1$ billion in 2025 revenue, but scale alone doesn't guarantee smooth sailing. While CCEP's pricing power is strong enough to absorb persistent cost inflation-pushing operating profit toward $2.54$ billion-the real strategic battle is external. We're seeing a defintely complex interplay of fragmented European sugar taxes, stricter environmental laws on packaging, and shifting consumer demands for low-sugar options. Understanding these Political, Economic, Sociological, Technological, Legal, and Environmental (PESTLE) pressures is the only way to accurately forecast their next decade of growth, so let's cut straight to the core risks and opportunities.

Coca-Cola Europacific Partners PLC (CCEP) - PESTLE Analysis: Political factors

Increased geopolitical instability impacting supply chains in Europe

Geopolitical instability, particularly the ongoing conflicts and tensions in Europe and the Middle East, remains a top-tier risk for Coca-Cola Europacific Partners. While CCEP is an expert at local execution, global events still ripple through its supply chain (the network of suppliers and logistics that brings ingredients to the plant and finished product to the store). The company's 2025 Strategic Report highlights that regional conflicts can disrupt logistics, increase operational costs, and even damage brand reputation.

Here's the quick math on CCEP's resilience: over 90% of the drinks CCEP sells are produced in the country where they are consumed. Plus, in 2024, 84% of their total spend went to suppliers based right in their operating countries. This hyper-local model is defintely a strategic defense against the worst of global supply chain shocks.

Still, the risk isn't zero. Raw materials like aluminum for cans or specialized packaging components often travel across borders, and any escalation in global tensions drives up the cost of energy and shipping, which CCEP must then manage through pricing or efficiency programs.

Trade tariffs and protectionist policies affecting sourcing costs

The global shift toward protectionist policies and the threat of new trade tariffs create real financial uncertainty for a company that buys and sells across 31 countries. CCEP is highly exposed to the cost of key commodities, and tariffs-essentially taxes on imported goods-can quickly inflate those costs.

For example, CCEP directly procures massive volumes of sugar: approximately 700,000 tonnes of beet sugar and 500,000 tonnes of cane sugar annually. Even though much of this is sourced locally in Europe or Australia, global commodity prices are set by world trade dynamics. If major trade partners like the US and China impose new tariffs, as was a significant threat in 2025 with proposals for a 10% universal tariff on all US imports, the resulting global economic slowdown and commodity price volatility would directly pressure CCEP's margins.

The key risk is that tariffs on materials like aluminum, PET (polyethylene terephthalate) plastic, or even machinery parts could force CCEP to either absorb the cost-hurting operating profit, which was up 7.2% on an adjusted comparable FX-neutral basis in H1 2025-or pass it on to the consumer, which risks volume loss.

Varying government stances on sugar taxes and public health initiatives

The varying, and often increasing, government levies on sugar-sweetened beverages (SSBs) are a permanent political reality. Governments see these taxes as both a public health tool and an easy revenue stream. As of 2025, at least 17 European countries levy some form of SSB tax.

This political factor directly impacts CCEP's product mix and pricing strategy. In H1 2025, the France sugar tax increase contributed to a volume decline in Coca-Cola Original Taste, but CCEP was able to partially offset this with a strong double-digit volume increase in products like Sprite, which had new listings. The tax also contributed to CCEP's overall H1 revenue per unit case (UC) growth, as the tax is typically included in the final price.

The company's response has been to aggressively reformulate and innovate, shifting consumers to low- and no-sugar options:

• Coca-Cola Zero Sugar H1 2025 volume grew +4.7% across Europe and APS.
• Diet Coke performance improved in Europe and APS.
• The focus shifts volume from high-taxed categories to low- or no-taxed ones, which is a smart maneuver.

Tensions in the Pacific region affecting market access and stability

The Asia-Pacific (APS) region, which includes the recently acquired Philippines business, is a major growth driver, but it is also highly sensitive to geopolitical and social tensions. The most concrete example in 2025 is the impact of the Middle East conflict on Southeast Asia.

The ongoing geopolitical situation in the Middle East led to brand boycotts in Indonesia, a key Southeast Asian market. This directly caused a decline in volumes in Southeast Asia, reflecting a softer consumer backdrop. This single political factor was significant enough to prompt CCEP to revise its annual comparable revenue growth forecast downward for the full year 2025, from a prior forecast of around 4% to a new range of between 3% and 4%.

This is a clear example of how political events far from a market can create a tangible, negative financial impact. Conversely, the more stable Australia/Pacific segment showed resilience, delivering a mid-single digit increase in H1 volumes (specifically +5.1%), demonstrating the value of CCEP's regional diversification.

Coca-Cola Europacific Partners PLC (CCEP) - PESTLE Analysis: Economic factors

Persistent high inflation driving up input costs for aluminum and sugar

You might think CCEP is shielded from inflation given its brand power, but even a giant bottling partner faces real pressure on its raw material costs. For the 2025 fiscal year, CCEP expects its Cost of Sales per unit case to increase by approximately ~2% on a comparable basis. This is a manageable increase, but it defintely eats into gross margin if not fully offset by pricing. The good news is the company is smart about managing this risk, hedging over 90% of its commodity input costs for the year.

The core issue remains the volatile pricing of key inputs like aluminum for cans and sugar/sweeteners. While the World Bank noted metal prices rose 5.5% in October 2025, the outlook for aluminum is mixed, with some analysts projecting the average price to be around $2,813 per tonne for 2025, which would be a slight drop from earlier highs. For sugar, a key cost component, prices actually fell by roughly 13% since the start of 2025 due to expected robust global supply, though they stabilized in the later part of the year. Here's the quick math on the expected impact:

• Input Cost Inflation (FY25 Guidance): ~2% increase in Cost of Sales per unit case.
• Hedging Strategy: Over 90% of commodity exposure is hedged, mitigating the full force of market price spikes.
• Commodity Price Volatility: Aluminum prices are volatile, while sugar saw a significant year-to-date decline but stabilized in Q4 2025.

Strong dollar creating currency translation headwinds for European earnings

The strength of the US Dollar (USD) against the Euro (EUR) and other operating currencies presents a clear currency translation risk for CCEP, which reports in Euros but generates substantial revenue outside the Eurozone. You see this play out directly in their guidance. Based on current spot rates as of mid-2025, the company anticipates a full-year Foreign Exchange (FX) headwind of around 150 basis points (1.5%) to revenue. The hit to the bottom line is even more pronounced, with an expected FX headwind of almost 200 basis points (2.0%) to operating profit.

This isn't an operational problem, but a financial one. It means that strong sales growth in a market like Australia, when translated back into Euros for the consolidated financial statements, is worth less than it was previously. This is a constant drag on reported earnings and one you must strip out when evaluating their underlying operational performance.

Consumer spending shifts due to cost-of-living pressures in key markets

The cost-of-living crisis is changing how consumers shop across Europe and the Asia Pacific region (APS). CCEP has observed a 'softening in demand' in markets like Germany, where consumers are prioritizing 'affordability and value for money.' Similarly, volume declines in Indonesia were attributed to a 'weaker consumer & macroeconomic backdrop.' The company is navigating this by focusing on revenue and margin growth management, which means raising prices and optimizing packaging.

This strategy is working to protect revenue, even as volumes face pressure. In the first half of 2025 (H1 2025), CCEP delivered a strong revenue per unit case growth of 3.8% overall, and even higher at 4.2% in Europe. This growth comes from a mix of headline price increases and a positive shift to smaller, higher-margin pack formats like mini cans. It's a classic strategy: balance premiumization with affordability to keep the consumer engaged. The volume softness is real, but pricing power is still strong.

Higher interest rates increasing the cost of capital for expansion projects

The global shift to higher interest rates, particularly by the European Central Bank (ECB) and other central banks, directly impacts CCEP's cost of capital. This is the hurdle rate for all their capital expenditure (CapEx) and expansion plans, including the acquisition of Coca-Cola Beverages Philippines, Inc. (CCBPI) in 2024. The company's full-year 2025 guidance projects finance costs to be around ~2%, reflecting the increased cost of servicing their debt. Their long-term debt stands at approximately $9.8 billion as of June 30, 2025.

While the company's Net Debt / Adjusted EBITDA target of 2.5X - 3.0X remains manageable, every basis point increase in borrowing costs makes future CapEx less accretive. For 2025, CCEP plans CapEx of approximately ~5% of revenue, which includes significant investments in technology, digital capabilities, and infrastructure. Higher rates mean a greater portion of the return on those investments is eaten up by debt servicing, making capital allocation decisions much tougher. They need a higher return on invested capital (ROIC) just to break even on new projects. This is why you see a continued focus on efficiency programs to deliver savings, aiming for €350 million to €400 million by 2028.

Coca-Cola Europacific Partners PLC (CCEP) - PESTLE Analysis: Social factors

Growing consumer demand for low-sugar and functional beverages

The biggest social shift impacting Coca-Cola Europacific Partners is the consumer flight from high-sugar beverages. This isn't a slow drift; it's a structural change driven by public health awareness and sugar taxation across key European markets. Your customers are actively seeking healthier alternatives, so CCEP's growth is increasingly tied to its ability to win in the low- and zero-sugar segments.

The company is meeting this head-on, with a commitment to reduce the average sugar per liter in its European soft drinks portfolio by a total of 10% by the end of 2025, measured against a 2019 baseline. This focus is paying off in volume. In the first half of 2025 (H1 2025), volume for Coca-Cola Zero Sugar was up +4.7% across Europe and the Asia Pacific South (APS) region. This is a clear indicator of successful portfolio management.

Increased focus on health and wellness driving portfolio diversification

Beyond simply removing sugar, consumers want added benefits-a trend that is fueling the functional beverage market. This market was valued at USD 130.96 billion in 2024 and is projected to climb to USD 174.12 billion by 2030. CCEP is capitalizing on this by pushing its energy and low-sugar flavor brands.

For example, Monster energy drink volumes surged nearly 15% in H1 2025, with its zero-sugar variants showing even stronger growth, up over 20%. Plus, the core brands are diversifying: Fanta Zero volumes grew by around 7% and Sprite Zero by around 13% in H1 2025 (excluding Indonesia). This is how a major bottler adapts-not just by cutting sugar, but by expanding into new, high-growth categories like hydration, coffee, and alcoholic ready-to-drink (ARTD) options, making the portfolio defintely more resilient.

Here's the quick math on key zero-sugar brands in H1 2025:

Labor market tightness in logistics and manufacturing sectors

Operational reality for a company with approximately 41,000 employees is that labor market tightness is a significant near-term risk. The logistics and manufacturing sectors, which are the backbone of CCEP's operations, face chronic workforce shortages.

Industry-wide data for 2025 shows that roughly 67% of transportation operations and 56% of warehouse operations are impacted by labor shortages. This is a direct pressure point on CCEP's supply chain efficiency and cost base. We are seeing wage inflation in the logistics sector, with labor costs rising by an estimated 9.5% year-over-year. High turnover, with warehouse operations seeing annual rates above 35%, forces continuous, costly recruitment and training cycles. CCEP must continue to invest heavily in talent retention and automation to mitigate this risk.

Strong public pressure for corporate social responsibility and ethical sourcing

Public scrutiny on major corporations is intense, and CCEP's reputation-and therefore its license to operate-is directly linked to its corporate social responsibility (CSR) performance, particularly on ethical sourcing and human rights. A failure to act responsibly is listed as a principal risk that could lead to reputational damage and litigation.

CCEP has set clear, ambitious targets to address this pressure:

• Source 100% of main agricultural ingredients and raw materials sustainably (ongoing target).
• Ensure 100% of suppliers are covered by the Supplier Guiding Principles (SGPs), which mandate compliance on sustainability, ethics, and human rights (ongoing target).
• Focus on implementing Corporate Sustainability Due Diligence across its value chain in 2025.

This commitment to 100% coverage across both raw materials and supplier conduct is the price of admission in today's market. It's not just about minimizing risk; it's about maintaining consumer trust and securing the supply chain for key ingredients like sugar, coffee, and packaging materials.

Coca-Cola Europacific Partners PLC (CCEP) - PESTLE Analysis: Technological factors

Automation and AI optimizing complex European and Pacific supply chains

The core of CCEP's operational efficiency in 2025 is the deep integration of Artificial Intelligence (AI) and automation, particularly across its sprawling European and Asia Pacific (APS) supply chains. This isn't just about faster robots; it's about smarter planning. The company uses its Customer Demand & Supply Planning system, which leverages machine learning to run complex scenarios and produce highly accurate sales demand forecasts. This system helps CCEP move closer to realizing the 'factory of the future,' ensuring products are available where and when consumers want them, which is defintely a challenge with such a vast geographic footprint.

This AI-driven approach also extends to sustainability and compliance. CCEP is using AI to centralize and validate data across its plants, logistics, and supplier portals, treating sustainability as a critical data problem first. This reduces risk and trims costs by spotting anomalies in emissions, water, and energy use early on.

E-commerce and direct-to-consumer (DTC) platforms accelerating sales growth

While CCEP is primarily a bottler-distributor, its investment in digital platforms is crucial for maintaining strong customer relationships and capturing growth in the fast-moving e-commerce space. The shift is from simply supplying retailers to actively partnering with them through digital tools.

A key near-term initiative is the pilot of the new eB2B platform, 'Up We Go,' launched in Spain. This platform digitizes the order-taking process with partner distributors. As of its initial rollout, the pilot onboarded approximately 1,000 outlets and four distributors across four regions. This is a critical step in streamlining the ordering process, cutting out friction, and securing CCEP's position as a world-class customer partner. The overall e-commerce market is expected to continue its massive growth trajectory in 2025, so CCEP needs to stay aggressive here.

Advanced data analytics improving promotional effectiveness and inventory management

Data analytics is CCEP's engine for Revenue Growth Management (RGM). This is where the rubber meets the road on profitability. The company uses a data-driven field sales tool called 'RED One' to guide sales teams on where to go, how to contact customers, and what actions to take, ensuring smart execution at the point of sale.

The impact of this focus is clear in the financial results. In the first half of the 2025 fiscal year (H1 2025), CCEP delivered strong revenue per unit case growth of 3.8%, a result directly attributed to 'positive headline pricing and promotional optimisation, with a continued focus on consumer price relevance, all built on data and insights.' They use advanced RGM tools, or 'SmartRGM,' to run simulations on pack, price, and promo elasticity, which means they can predict exactly how a price change will affect volume before they implement it.

New bottling and packaging technologies to reduce material usage

Technology in bottling and packaging is driven by CCEP's net-zero and sustainability goals, specifically the need to reduce virgin plastic and ensure circularity. This isn't a PR exercise; it's a massive, capital-intensive overhaul of production lines. The company's mid-term growth objectives include a Capital Expenditure (Capex) target of approximately 4-5% of revenue, which includes significant investment in these new lines.

They have a 2025 goal to make 100% of their packaging recyclable. Plus, they are targeting a use of at least 50% recycled material in their packaging by 2030. The progress is tangible:

• Transitioned all half-liter plastic bottles in Great Britain to 100% recycled plastic (rPET), which saves 20,000 tonnes of virgin plastic annually.
• Adopted lighter cans and moved from plastic shrink film to cardboard ('Shrink to Board') packs for multi-packs in Western Europe, saving 4,000 tonnes of plastic from circulation.
• Rolled out new bottles with attached caps to boost collection and recycling, a major design change facilitated by new bottling technology.

What this estimate hides is the complexity of scaling these technologies across 31 diverse markets, especially in the APS region where recycling infrastructure is still developing. Still, the investment is a clear technological priority for long-term cost and risk management.

Coca-Cola Europacific Partners PLC (CCEP) - PESTLE Analysis: Legal factors

Stricter Extended Producer Responsibility (EPR) laws increasing packaging costs

The regulatory environment for packaging is tightening across CCEP's markets, directly translating into higher operating costs. Extended Producer Responsibility (EPR) schemes are shifting the full financial burden of packaging waste management-collection, sorting, and recycling-onto producers. This is not a theoretical risk; it's a realized cost in the 2025 fiscal year.

For example, the UK's EPR for packaging scheme, which began invoicing in October 2025, provides clear cost metrics based on material type. This 'ecomodulation' principle means CCEP pays more for less recyclable materials. The base fees for 2025 to 2026 illustrate the financial pressure:

This immediately impacts the cost of goods sold (COGS). CCEP is responding by aiming for 100% recyclable packaging by the end of 2025, but the compliance and investment costs for this transition are substantial.

Ongoing legal challenges and uncertainty around national sugar taxes

The legal landscape for sweetened beverages remains fragmented and volatile, forcing CCEP to manage a complex, multi-tiered tax structure across its 29 markets. As of 2025, at least 17 European countries levy some form of tax on sugary beverages, and the trend is toward tiered systems that penalize higher sugar content more severely.

This complexity is not just about the tax amount; it's about the methodology. In October 2025, the Gulf Cooperation Council (GCC) approved a shift from a flat 50% excise tax on the retail price to a new tiered system based on total sugar content per 100 milliliters. This change requires rapid product reformulation and supply chain adjustments to minimize the tax hit.

Consider the varying European tax tiers that directly influence product pricing and reformulation strategy:

• Portugal's tax structure reaches €0.20 per liter on drinks containing $\ge$80 grams of sugar per liter.
• Croatia's tiered excise tax hits €7.96 per hectoliter on drinks with $>$8 grams of sugar per 100 mL.

The legal uncertainty stems from constant legislative amendments and the industry's own legal challenges, requiring CCEP to defintely budget for ongoing litigation and regulatory affairs spending.

New European Union (EU) regulations on digital privacy and data security

The EU's aggressive push for digital governance creates a significant compliance challenge, particularly for a company with CCEP's scale and reliance on consumer data for marketing and logistics. The General Data Protection Regulation (GDPR) is just the baseline now.

The new regulatory frameworks in 2025 introduce new layers of legal risk:

• The Digital Markets Act (DMA) is fully enforceable, and while it primarily targets 'gatekeepers,' CCEP's large-scale digital operations and data use must align. Non-compliance risks fines up to 10% of global turnover.
• The EU Data Act, effective September 12, 2025, introduces new rules for data access and sharing, covering both personal and non-personal data from connected devices (Internet of Things or IoT). This impacts CCEP's smart vending machines and logistics data.
• The EU AI Act's phased application began in 2025, imposing strict rules on data usage, transparency, and risk management for any AI systems CCEP uses in its operations, from demand forecasting to automated customer service.

Compliance isn't cheap; you have to invest in a dual compliance framework that addresses both privacy (GDPR) and market/AI governance.

Varying national labor laws and collective bargaining agreements across 29 markets

Managing a workforce across 29 distinct markets means CCEP must constantly navigate a patchwork of national labor laws and powerful local collective bargaining agreements (CBAs). This isn't a single labor policy; it's 29 different, evolving legal obligations.

Recent 2025 CBA negotiations highlight the real-world financial and operational impact:

• In Germany (CCEP DE), a new collective agreement reached in November 2025 includes a one-off payment of EUR400 for employees and trainees in 2025, following recent strikes, plus guaranteed wage increases starting in 2026.
• In the Netherlands (CCEP Nederland), a 9-month CBA running from January 1, 2025, included an initial salary increase of 3.25% effective April 1, 2025.

These agreements dictate not only wages but also working hours, overtime rules, and benefits, such as the inclusion of May 5th (Liberation Day) as an annual public holiday in the Netherlands CBA. The risk here is constant labor unrest and the need for decentralized, market-specific negotiation teams to ensure local legal compliance. You have to be ready to negotiate, not just dictate.

Coca-Cola Europacific Partners PLC (CCEP) - PESTLE Analysis: Environmental factors

If you're managing a portfolio, you defintely need to watch the regulatory fragmentation. What works in Germany won't work in Australia, and that complexity eats into margins. The immediate action is clear.

Aggressive targets to reduce virgin plastic use and increase recycled content

The push for a circular economy is no longer a marketing exercise; it's a core operational mandate for Coca-Cola Europacific Partners PLC (CCEP). The company's near-term goal is to hit an average of 50% recycled PET (rPET) in its plastic bottles across the Asia-Pacific (APS) region by the end of 2025. This is a critical metric, especially since the European segment already surpassed its 2023 target. To be fair, the European market is further ahead, but the APS region is catching up fast.

The overall Group performance (excluding the Philippines) for 2024 showed strong progress, with 56.0% rPET usage in total PET material, reflecting the heavy lifting in Europe at 63.2% rPET. The long-term plan is even more ambitious: stop using oil-based virgin plastic in all bottles by 2030. This requires massive capital expenditure (CapEx) in recycling infrastructure and new technologies like chemical recycling, which CCEP Ventures is actively funding.

Here's the quick math on packaging progress:

Water scarcity risks in key bottling regions, especially in Spain and Indonesia

Water is the main ingredient, so water security is a direct financial risk. CCEP has a long-standing commitment to replenish 100% of the water used in its finished drinks, a target it already exceeded at the Group level in 2024, replenishing 113.1% of sales volume water. Still, the risk is localized and acute, particularly in high-stress regions.

The situation in Spain is a concrete example. The Guadalquivir River basin in Andalusia has faced the longest and most intense drought since 1970. CCEP is mitigating this by supporting projects like Misión Posible: Desafío Guadalquivir, which works to improve agricultural irrigation and restore marshland, returning hundreds of millions of liters of water to nature. In Indonesia, community-based water management in areas like Karawang is critical for social license to operate, ensuring local communities have access to clean water and sanitation.

The company is addressing this with technology and CapEx:

• Invested approximately €2.2 million in water efficiency technology in 2024.
• Partnered with Deep Science Ventures to find new water-saving technologies.
• All production facilities must carry out source water vulnerability assessments (SVAs).

Pressure to decarbonize the entire value chain, from fleet to production

The climate transition roadmap is clear: Net Zero by 2040, covering all Scope 1, 2, and 3 emissions. The near-term pressure point is the supply chain (Scope 3), which accounts for roughly 90% of the company's total carbon footprint. Packaging and ingredients are the biggest drivers.

The interim target is a 30% absolute reduction in total value chain GHG emissions by 2030, against a 2019 baseline of 8,507,076 Metric Tonnes of CO2e. As of 2024, CCEP has achieved a 20.0% reduction, putting it on a strong, but not guaranteed, trajectory. To accelerate this, CCEP is pushing its suppliers hard.

The financial commitment is significant:

• Planned investment of approximately €405 million in emissions reduction initiatives between 2024-2026.
• Requirement for 100% of carbon strategic suppliers in the Asia-Pacific region to set science-based targets by 2025.

Mandatory Deposit Return Schemes (DRS) requiring significant operational investment

Deposit Return Schemes (DRS) are a regulatory certainty across many markets, but the fragmented rollout creates an operational headache and capital demand. While CCEP supports the schemes, the devil is in the details-specifically, the lack of a consistent, interoperable system across different jurisdictions, especially in the UK where the scheme is set to launch in England and Northern Ireland in October 2027.

The core issue is that CCEP, as a producer, will be financially and operationally responsible for funding and managing the collection infrastructure. A trial in Scotland demonstrated that a small incentive of 20p per container can drive a massive surge in returns (eighty-fold increase), but this deposit amount is a liability until the container is returned. This requires upfront investment in Reverse Vending Machines (RVMs) and a robust Deposit Management Organisation (DMO). The risk isn't the scheme itself, but the cost of managing multiple, non-aligned schemes.

Next Step: Portfolio Managers: Stress-test CCEP's valuation against a 15% increase in global sugar tax exposure by Q1 2026.